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Eversource (ES) Down 2.5% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Eversource Energy (ES - Free Report) . Shares have lost about 2.5% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Eversource due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Eversource's Q3 Earnings and Revenues Lag Estimates

Eversource Energy reported third-quarter 2021 operating earnings of $1.02 per share, which lagged the Zacks Consensus Estimate of $1.05 by 2.9%.

The bottom line, however, improved 1% year over year. The improvement in earnings was due to strong contribution from the acquired Columbia Gas of Massachusetts assets, and solid performance of Electric Transmission and Electric Distribution segments.

Revenues

Third-quarter revenues of $2,461.2 million missed the Zacks Consensus Estimate of $2,572 million by 4.3%. Total revenues, however, improved 5% from the year-ago figure of $2,343.7 million.

Highlights of the Release

Operating expenses increased nearly 10.9% year over year to $1,977.9 million. Operating income was down 13.9% from the prior-year quarter to $483.3 million. Interest expenses increased 10.3% from the prior-year quarter to $145.4 million.

Net income for the quarter under review was $285.1 million, down 18.1% from $348.1 million recorded in the year-ago period.

Segmental Performance

Electric Distribution: Earnings from this segment were $213.6 million, up 3.9% from the prior-year quarter. The improvement was primarily due to higher revenues, offset by increased operation and maintenance expenses as well as depreciation and property taxes.

Electric Transmission: Earnings from this segment were $139.4 million, up 11% from the prior-year quarter. The upside was due to increased investment in Eversource’s transmission facilities.

Natural Gas Distribution: This segment incurred a loss of $22 million compared with a loss of $15.4 million in the prior-year quarter.

Water Distribution: Earnings from this segment were $17.5 million, down 24.3% from $23.1 million in the year-ago quarter.

Eversource Parent & Other Companies: The segment’s earnings were $2.2 million compared with $12.8 million in the year-ago quarter.

Guidance

Eversource reaffirmed its earnings guidance for 2021 in the range of $3.81-$3.93 per share. The midpoint of management’s earnings guidance is $3.87, which is higher than the Zacks Consensus Estimate of $3.84 for the year.

The company also reaffirmed its expectation for long-term earnings per share growth rate from existing core regulated businesses in the upper half of 5-7%, using the $3.64 per share earned in 2020 as a base.

Eversource reaffirmed its capital expenditure view for 2021 to be $3.5 billion. Its total capital expenditure for the 2021-2025 time period is expected to be $17 billion, which will assist Eversource to achieve its carbon neutral target by 2030.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

VGM Scores

Currently, Eversource has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions has been net zero. Notably, Eversource has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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